Soda Tax Failing In NY, Big Joke In Philadelphia

Several states and cities around the country consider taking part in the latest trend of levying a “soda tax” on high-calorie beverages. But in New York state, the measure looks certain to die a quiet death in the state house, while the folks in Philadelphia are looking at a loophole that could render the whole “combatting obesity” thing nonexistent.

In New York, where backers of the Soda Tax say it could generate upwards of $1 billion for the state in additional revenue, it looks like the bill won’t get past the state Senate. It would need a minimum of 32 out of 61 votes to move on, but with the Senate Dem/Rep split at 31-30 and a number of Democrats already voicing their opposition to the tax, it would be a shock for this proposal to go any further.

Meanwhile, about 100 miles down I-95, the Mayor of Philadelphia has put forth his plan for a Soda Tax. Unfortunately, that plan has a gaping loophole in it that could undermine the purported intent of the tax.

While the proposed Philly tax would add cost to sugary drinks, it’s not a tax that has to be paid at the point of purchase by the customer. Rather, retailers pay an annual tax — $.02/ounce — based on the total number of ounces they sell during the year.

That means that stores who fear that adding $.40 in tax to a bottle of soda will have a huge, negative impact on their sales can do things like spread that money to higher-ticket items where it won’t be as noticeable.

In that situation, even though the city would still get its tax revenue at the end of the year, it has nothing to discourage the sale of sugary drinks. Thus, the Soda Tax is just another tax.

The Mayor’s office shrugs off these concerns.
“We don’t know what retailers are going to do,” a rep for the Mayor said. “There’s a very real possibility they will absorb the tax increase across a number of products.”

There is also the likelihood that, since the tax is being paid on total ounces sold, restaurants and stadium concessions will begin to water down their drinks even more in an effort to reduce price increases.

“Take a Coca-Cola at the Wachovia Center,” one expert says, referring to one of Philly’s three major pro sports venues. “The price there is already $3 or $4, so two cents per ounce is not that much more. So maybe they don’t raise the price, but add a little more ice.”

Or, since it’s a tax that only exists within the city limits, another person believes, “People are going to load up trucks and vans with soda from the suburbs and sell it on the street.”